Tuesday, March 25, 2014

William Nordhaus, economist.

William Nordhaus, Economist.
aka: Waiting for the other shoe to drop. aka: The Fierce Urgency of Now. (Not.)

Objects in mirror are closer than they appear:

I apologize for being rude and stupid - a boor. I simply look at the order of points in Chapters 12 & 13, the mis-naming of abatement as 'mitigation', and respond with the Brazilian anti-smoking image.

A more gracious and civilized reviewer (Mark Jaccard) says, more gently, "Lately, however, he has begun to disappoint — as demonstrated by The Climate Casino," and goes on to politely & coolly demonstrate the point. Speaking of Nordhaus' earlier work he says, "... his analysis essentially vindicated business as usual for our fossil fuel-addicted economy." For me, Nordhaus' pervasive equivocation in 'The Climate Casino' carries on with the vindication - in spades.

Nordhaus is a seriously smart guy though, no doubt about that - like an actuary you meet in the Sun Life cafeteria (since in those days the actuaries sometimes ate with the hoi polloi and it really was a free lunch) - who tells you he can closely determine the event but chokes when he thinks of telling. (Because he knows which side his bread is buttered on? Can't say.)

Perhaps he is a deeply conservative surfer caught on a growing (overwhelming?) wave of cognitive dissonance:°º¤ø,¸¸,ø¤º°`°º¤ø,¸,ø¤°º¤ø,¸¸,ø¤º°`°º¤ø,¸¸,ø¤º°`°º¤ø,¸¸,ø¤º°`°º¤ø,¸¸,ø¤º°`°º¤ø,¸¸,ø¤º°`°º¤ø,¸¸,ø¤º°`°º¤ø,¸¸,ø¤º

So ... we've got John Kerry's speech in Jakarta ignored; Jim Hansen wringing his hands and focussing his angst on a nuclear renaissance (see his March 10th OpEd); and William Nordhaus (in thick bifocals) damning action with faint praise - or praising inaction with equivocation as the case may be.

1. A Question of Balance: Weighing the Options on Global Warming Policies, William Nordhaus, Yale University Press, 2008, ISBN: 978-0-300-13748-4. (There is an open electronic copy at BooksZa, for now at least.)

Contents & AcknowledgmentsIntroductionONE Summary for the Concerned Citizen
Overview of the Issue of Global Warming
The Economic Approach to Climate-Change Policy
The DICE Model of the Economics of Climate Change
The Discount Rate
The Prices of Carbon Emissions and Carbon Taxes
Major Results
The Importance of Efficient Policies
The Advantage of Carbon Taxes and Price-Type Approaches
Tax Bads Rather than Goods
Two Cautionary Notes
TWO Background and Description of the DICE Model
THREE Derivation of the Equations of the DICE-2007 Model
FOUR Alternative Policies for Global Warming
FIVE Results of the DICE-2007 Model Runs
SIX The Economics of Participation
SEVEN Dealing with Uncertainty in Climate-Change Policy
EIGHT The Many Advantages of Carbon Taxes
NINE An Alternative Perspective: The Stern ReviewTEN Summary and Conclusions
Reservations
Major Results and Conclusions
1. optimal policy would be relatively inexpensive for a 2.6°C world in 2100
2. optimal carbon (not CO2) price: $42 per ton going to $202 by 2100
3. for cost-effective & efficient policies everyone must play
4. DICE cf. IPCC
5. low-cost environmentally benign backstop technology
6. analysis of the Kyoto Protocol
7. not economically advantageous to undertake sharp emissions reductions
8. uncertainty/risk analysis
9. achieving (even the) optimal policy is likely to prove politically arduous
10. cap-and-trade cf. tax cf. cap-and-tax
Appendix: Equations of the DICE-2007 Model
Notes & References & Index

2. The Question of Global Warming (review of 'A Question of Balance' by William Nordhaus, & 'Global Warming: Looking Beyond Kyoto' edited by Ernesto Zedillo), Freeman Dyson, The New York Review of Books, June 12, 2008 - Source (paywall), Open Copy.

3. The Question of Global Warming: An Exchange, William D. Nordhaus, Dimitri Zenghelis, and Leigh Sullivan, with a reply by Freeman Dyson, The New York Review of Books, September 25, 2008 - Source.

6. Why the Global Warming Skeptics Are Wrong, William Nordhaus, The New York Review of Books, March 22 2012 - Source.

7. In the Climate Casino: An Exchange (response to 'Why the Global Warming Skeptics Are Wrong'), Roger W. Cohen, William Happer, and Richard Lindzen, with a reply by William Nordhaus, The New York Review of Books, April 26 2012 - Source.

8. The Climate Contrarians (response to 'In the Climate Casino: An Exchange'), Fred Singer, with a reply by William Nordhaus, The New York Review of Books, August 16 2012 - Source).

9. The Climate Casino: Risk, Uncertainty, and Economics for a Warming World, William Nordhaus, Yale University Press, October 2013, ISBN: 978-0-300-18977-3. (No open electronic copy anywhere that I can find.)

CONTENTS
Acknowledgments & Note to Readers
PART I THE GENESIS OF CLIMATE CHANGE1 First Encounters in the Climate Casino
A ROAD MAP OF THE TERRAIN AHEAD
THREE STEPS FOR TODAY
1. understand and accept the gravity of the impacts of global warming
2. establish policies that raise the price of CO2 emissions
3. intensively pursue low-carbon, zero-carbon, and negative-carbon technologies
THE CIRCULAR FLOW OF CLIMATE CHANGE, IMPACTS, AND POLICY
2 A Tale of Two Lakes
3 The Economic Origins of Climate Change
4 Future Climate Change
5 Tipping Points in the Climate Casino
PART II IMPACTS OF CLIMATE CHANGE ON HUMAN AND OTHER LIVING SYSTEMS
6 From Climate Change to Impacts
7 The Fate of Farming
8 The Impact on Human Health
9 Perils for the Oceans
10 Intensification of Hurricanes
11 Wildlife and Species Loss12 Adding Up the Damages from Climate Change
VULNERABILITY BY ECONOMIC SECTOR
ESTIMATES OF AGGREGATE DAMAGES
A RISK PREMIUM FOR THE HAZARDS IN THE CLIMATE CASINO
CAUTIONARY RESERVATIONS ABOUT THE ESTIMATES
[CONCLUSIONS]
PART III SLOWING CLIMATE CHANGE: STRATEGIES AND COSTS13 Dealing with Climate Change: Adaptation and Geoengineering
ADAPTATION: LEARNING TO LIVE WITH CLIMATE CHANGE
GEOENGINEERING: COUNTERACTING GLOBAL WARMING WITH
ARTIFICIAL VOLCANOES14 Slowing Climate Change by Reducing Emissions: Mitigation
WHERE DO CO2 EMISSIONS COME FROM?
CO2 EMISSIONS FROM THE HOUSEHOLD PERSPECTIVE
TECHNOLOGIES FOR REDUCING CO2
SOME FUTURISTIC TECHNOLOGIES15 The Costs of Slowing Climate Change
(just the first few paragraphs are excerpted)16 Discounting and the Value of Time
OUR FIRST MORTGAGE
REAL VERSUS NOMINAL INTEREST RATES
A DISCOUNTING EXAMPLE
DETERMINANTS OF INTEREST
CONSUMPTION TODAY VERSUS CONSUMPTION TOMORROW
PRESCRIPTIVE AND OPPORTUNITY-COST VIEWS OF DISCOUNTING
ESTIMATES OF DISCOUNT RATES
DISCOUNTING AND GROWTH
APPLICATION TO CLIMATE-CHANGE INVESTMENTS
ETHICS AND DISCOUNTING
THE HEAVY BURDEN OF VERY LOW DISCOUNTING
SUMMARY ON APPROACHES TO SLOWING CLIMATE CHANGE
PART IV POLICIES AND INSTITUTIONS FOR SLOWING CLIMATE CHANGE
17 Historical Perspectives on Climate Policy
18 Climate Policy by Balancing Costs and Benefits
19 The Central Role of Carbon Prices
20 Climate-Change Policies at the National Level
21 From National to Harmonized International Policies
22 Second Best and Beyond
23 New Technologies for a Low-Carbon Economy
PART V CLIMATE POLITICS24 Climate Science and Its Critics
THE MEANING OF SCIENTIFIC CONSENSUS
CONTRARIAN VIEWS ON GLOBAL WARMING
POLICIES IN THE CLIMATE CASINO
UNATTAINABLE CERTAINTY25 Public Opinion on Climate Change
PUBLIC VIEWS ON SCIENCE AND GLOBAL WARMING
UNDERSTANDING MISUNDERSTANDING
CLOSING THE PARTISAN DIVIDE ON CLIMATE POLICY: A CONSERVATIVE PERSPECTIVE26 Obstacles to Climate-Change Policies
PRISONERS OF NATIONALISM
PRISONERS OF THE PRESENT
PRISONERS OF PARTISANSHIP
PRISONERS OF ECONOMIC SELF-INTEREST
OVERCOMING THE OBSTACLES
A FINAL VERDICT
Notes & Index

10. Gambling with Civilization (review of 'The Climate Casino'), Paul Krugman, The New York Review of Books, November 7 2013 - Source.

Apologies to Mark Jaccard - he kindly emailed me a copy of the review but was concerned that I might distribute it (and I presume, upset some kind of copyright arrangement). For the record, someone may have gone down to a library, found a Science Magazine there, and taken a copy from that.

It is incredible to me that on this issue which is so important to us all (or should be), opinions are restricted by commerce. Bollocks! Some of the leading lights, James Hansen in particular, make sure that their thoughts are distributed openly.

Even more incredible that such a smart guy as William Nordhaus puts himself on the status quo (and personally comfortable I guess) side of the discussion. It is reassuring to find gentle criticism in Mark Jaccard's review - otherwise I might think I am really crazy. In Nordhaus' article for NYR 'Why the Global Warming Skeptics Are Wrong' (linked to above) he is so clear - why then is 'The Climate Casino' so wishy washy?

These particular two pages hit me like Groundhog Day (the Bill Murray film) ... I just kept reading them again and again, going round & round and ... choking: (my emphasis)

12 ADDING UP THE DAMAGES FROM CLIMATE CHANGE
...
CAUTIONARY RESERVATIONS ABOUT THE ESTIMATES
...
[144]
The major qualification centers on the difficulty of assessing the impacts of tipping points—the potentially discontinuous, abrupt, and catastrophic climate changes and consequences. The economic impacts of the potential singularities are difficult to estimate for the same reasons as those of species and ecosystem losses. They are hard to forecast; the physical impacts are unknown; and the consequences generally lie far outside the marketplace. The challenges are compounded here because the effects may threaten the biological and physical foundations of human and natural societies. In this respect, they are similar to existential debates about national security, where it is difficult to measure the costs and benefits of different strategies. At this stage, the physical sciences still have far to go in understanding the threats from these large-scale tipping points. Once those are better known, we can attempt to understand the dangers they pose to social and natural systems as well as the steps required to prevent these geophysical bank runs.

[CONCLUSIONS]

What should we conclude at the end of this review of the impacts of future climate change? The first point to emphasize is the difficulty of estimating impacts. They combine the uncertainties of emissions projections and climate models. Even if we overlook the uncertainties about future climate change, the reactions of human and other living systems to these changes are very poorly understood. In part, reactions of social systems are hard to forecast because they are so complex. In addition, humans increasingly manage their own environment, so that a small investment in adaptation may offset the impact of climate change on human societies. Moreover, climate changes are almost certain to occur in the context of technologies and economic structures that will differ vastly from those of today.

However, we must look through the fuzzy telescope as best we can. A second conclusion involves the estimated economic impacts of climate change from sectors that we can reliably measure, particularly for high-income countries of today or the future. The estimates here are that the economic impacts from climate change will be small relative to the likely overall changes in economic activity over the next half [145] century to century. Our estimated impacts are in the range of 1-5 percent of output for a 3°C warming. This compares to projected improvements in per capita GDP in the range of 500 to 1,000 percent over the same period for poor and middle-income countries. The loss in income would represent approximately one year's growth for most countries spread over several decades.

This projection will surprise many people. However, it is based on the finding that managed systems are surprisingly resilient to climate changes if they have the time and resources to adapt. This finding applies especially to high-income market economies with small agricultural sectors. While some might worry that this dooms poor countries to be laid low by climatic shocks, this concern overlooks the economic growth that underlies the projections of major climate change. China and India, with more than 2.5 billion people, have seen their per capita incomes rise by a factor of almost ten over the past half century.6 Another half century of similar growth will raise the per capita incomes in India and China to around $50,000, with most people working in services and few left in rural farming. The vulnerability of today's poor countries to climate-change impacts is likely to decline significantly by the end of the twenty-first century.

A third major conclusion is that the most damaging impacts of climate change—in unmanaged and unmanageable human and natural systems—lie well outside the conventional marketplace. I identified four specific areas of special concern: sea-level rise, hurricane intensification, ocean acidification, and loss of biodiversity. For each of these, the scale of the changes is at present beyond the capability of human efforts to stop. To this list we must add concerns about earth system singularities and tipping points, such as those involved in unstable ice sheets and reversing ocean currents. These impacts are not only hard to measure and quantify in economic terms; they are also hard to manage from an economic and engineering perspective. But to say that they are hard to quantify and control does not mean they should be ignored. Quite the contrary, these unmanaged or unmanageable systems are the ones that should be studied most carefully because they are likely to be the most dangerous over the longer run.

To put this in perspective, the total volume of ice in the endangered ice caps is equivalent to approximately 1,600,000,000,000,000,000 gallons of water. This is far beyond what humans can easily pack up to store in some convenient location. The implications of sea-level rise and more intense hurricanes are easily comprehended, and in reality human societies can adapt to them without catastrophic losses. But the implications of ocean acidification and the potential loss of large numbers of species are difficult to comprehend and value reliably. We cannot rule out the possibility that future technologies—the analogs of Bill Gates's patent on hurricane modification—will change the outlook for these worrisome areas. But the hurdles here are much higher than for managed systems such as health and agriculture—and the prudent course is to assume these will not be manageable over the next century or so.

Finally, given what is known about impacts, is there a natural limit for which we can say, "Go up to this point but no further"? It would simplify policy if we could find some focal point, some precise numerical target for climate policy. Scientists and policymakers at Copenhagen in 2009 determined that a temperature increase of 2°C compared to preindustrial levels was the maximum that was within the safety margin for earth systems. What does our study of impacts suggest about the Copenhagen target?

A balanced approach suggests that the 2°C target is both too low and too high. It is too low given the identified damages analyzed above and the high costs of attaining such an objective discussed in Part III. But it is too high a target if we believe, along with many earth scientists, that the earth has already crossed the thresholds of some of the dangerous tipping points.

How can we resolve this dilemma of whether policies are aiming too high or too low? The answer lies in the realm of costs. Faced with the dilemma of deciding between too high and too low, we need to consider the costs of slowing climate change and of attaining different targets, to which I turn next. When that is completed, we can compare costs and benefits and propose a solution going forward—one that balances the twin objectives of preserving our environment for the future while economizing on losses in living standards along the way.

"GOD DAMN THEM ALL!

I was told we'd cruise the seas for American gold, we'd fire no guns, shed no tears.
But I'm a broken man on a Halifax pier, the last of Barrett's Privateers."

Hardly 'the last' by any means but that's what it feels like tonight. And the music I am actually listening to as I write is Arvo Pärt: Spiegel im spiegel not Stan Rogers.

Jim Hansen (it seems to me) knows time is running out and so does what he can to promote a desperate & extreme long shot - Thorium nuclear reactors - not to mention just as dirty as CO2 if not moreso.

He's not the only one: Gwynne Dyer, the guy at The Guardian? ... George Monbiot, Clive Hamilton; to mention just a few. Or the likes of Marina Silva and Elizabeth May who do what they can (read 'waste their time and energy') in the moribund political realm. Ai ai ai!

I collected some photographs of young Turkana girls taken a long time ago when the lake was larger - viz. before Ethiopia decided they need the water in it more than Kenya does. I was going to post them, maybe later.